As life gets increasingly expensive, more credit cards are offering features that can help offset the ever-increasing cost of living. If you’re able to manage credit wisely by paying in full each month to avoid paying interest, you could potentially come out ahead.
From earning cash back on groceries and gas to scoring discounts and statement credits and protecting your purchases, find out which credit cards are the best if you’re on a tight budget.
The Key Features of a Credit Card for Tight Budgets
If you’re looking to stack up some small wins that can help stretch your budget a bit, the right credit cards can make a difference.
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“For those who pay their monthly credit card balance off in full each month, credit card rewards can be a great way to supplement your budget or even earmark ‘fun money,'” says Kyle Burbank, head writer and YouTube content creator for Fioney, a financial education platform. With the latter option, he says, you can enjoy splurges without feeling guilty, which also helps you reach your overall budgeting goals.
Of course, some rewards credit cards are geared toward high-end travel or other priorities, so it’s important to seek out perks that align with the type and level of spending you do. Some features to look for in a budget-friendly credit card could include the following:
— Cash back or rewards targeting your spending style. Flat-rate rewards across the board or bonus rewards for your top spending categories can help you maximize cash back. For people on a tight budget, that might mean choosing cards with bonus categories like groceries, gas or dining. Also important: “Ensure that you choose a card that offers true cash back, meaning that points can be redeemed for statement credits or account deposits at a value of 1 cent per point,” says Burbank.
— Welcome bonuses that are attainable. “Sign-up bonuses can be very lucrative, however, the bonus is only worthwhile if you can reach the required spending in a reasonable timeframe,” says John Taylor Garner, founder and CEO of Odynn, a loyalty and rewards platform. “If the welcome bonus requires you to dramatically alter your spending habits, then it is not a bonus; it’s an incentive to overspend.”
Also, look at the bonus-to-spending requirement ratio, says Burbank. “For example, earning $200 back from spending $500 on the card within the first three months is a better return than spending $1,000 to earn $200,” he says.
— Statement credits you will use. Some cards offer perks such as a $10-per-month ride-hailing credit, but that has no value to you if you don’t use those services. “Assess the value of credits relative to how much you would have paid otherwise and not merely the face value of the stated credit,” says Garner.
— Purchase protections that can mean future savings. Cards with perks like cellphone insurance, extended warranty protection on new items, purchase protection against loss/damage, and rental car coverage can help you recoup losses. “These benefits can potentially save thousands of dollars and/or hours of time lost resolving issues related to damaged/purchased goods,” says Garner.
With these tips in mind, here are our picks for the best credit cards for a tight budget.
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Best Card for Grocery Spending: Blue Cash Preferred庐 Card from American Express
If you find yourself spending more and more at U.S. supermarkets, there’s the that’s hard to beat for grocery cash back. “Grocery is typically one of the two largest categories of expense in households. By maximizing cash back in this category, consumers can further extend their limited budgets,” says Garner.
You’ll earn 6% cash back at U.S. supermarkets on up to $6,000 per year in eligible purchases (then 1%). The catch is that the card has a $0 intro annual fee for the first year, then $95. But with some quick math, you can figure out if it’s worth it. If you spend even $200 per month on groceries (not hard to do), you’d earn $12 per month (or $144 yearly), which is more than enough to offset the fee.
Then when you factor in the card’s other bonus earnings categories (6% cash back on select streaming subscriptions and 3% back on gas and transit), you can easily come out ahead.
Bonus tip: If you get this (or any) AmEx card, pay attention to AmEx Offers. It’s a revolving collection of offers that provide either a statement credit or bonus points on shopping, dining and more. Offers vary by cardholder, have expiration dates and require you to opt in. One recent offer was to earn $49 back on a Walmart+ annual membership.
Best Card for Dining and Entertainment: Capital One Savor Cash Rewards Credit Card
The can help expand your “fun budget” if you enjoy eating out and seeing shows but need to keep that spending in check. The card lets you earn unlimited 3% Cash Back at grocery stores (excluding superstores like Walmart庐 and Target庐), on dining, entertainment and popular streaming services, plus 1% Cash Back on all other purchases.
The Savor card also has an impressive limited-time cash bonus offer of $250 once you spend $500 on purchases within the first three months from account opening. A boost of cash like that can help you afford those concert tickets you’ve been eyeing. You’ll also get a 0% intro annual percentage rate for 12 months on purchases and balance transfers; 18.49% to 28.49% (variable) APR after that.
Best Card for No-Brainer Cash Back: Citi Double Cash庐 Card
If you don’t want to think about which rewards credit card to use for each transaction, then a flat-rate 2% cash back credit card may offer the best value. “No annual fee, simple structure and 2% cash back are offered by several credit cards,” says Garner.
The offers unlimited 1% cash back when you buy, plus an additional 1% as you pay, on every purchase, totaling 2% back.
Also helpful if you have a lingering debt that is weighing down your budget, this card has a 0% intro APR for 18 months on balance transfers; after that, the APR will be 17.49% to 27.49% (variable). This can help you make faster progress on what you owe and pay less interest over time.
Best Card for Purchase Protection: Chase Freedom Unlimited庐
Purchase protection is an underrated credit card benefit to have in your pocket, and it isn’t available on most cards, especially those with no annual fee. That’s one reason why the card is worth a look. It covers you for eligible new purchases for 120 days from the date of purchase against damage or theft up to $500 per item. In addition, the card has extended warranty protection, which extends the time period of the manufacturer’s U.S. warranty by an additional year, on eligible warranties of three years or less.
This card also makes the list for its excellent cash back program. You’ll enjoy 5% cash back on travel purchased through Chase Travel?, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more; 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and 1.5% on all other purchases. Note that the base earning rate is higher than the 1% that many cards offer.
Finally, cardholders earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening, and the 0% intro APR on purchases for 15 months from account opening on purchases and balance transfers; after that, the APR will be 18.24% to 27.74% variable.
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Best Card for Cellphone Protection: Wells Fargo Active Cash庐 Card
Paying for cellphone insurance for everyone on your family plan can inflate your monthly bill, but having no protection can result in a costly bill if a phone gets damaged or stolen.
One solution? Get a credit card that offers cellphone protection like the . Cardholders just have to pay their cellphone bill with the card each month to activate $600 of cellphone protection coverage against damage or theft (subject to a $25 deductible).
But that alone isn’t the only reason to consider this card. It also hits the trifecta of card perks for people on a budget: $0 annual fee, unlimited 2% cash rewards and earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months from card opening.
Best Card to Use for Vacation: Capital One VentureOne Rewards Credit Card
If you are an occasional traveler who wants to keep things simple, the can help lower your vacation bill. All you have to do is pay for travel with your card and then redeem the rewards you’ve accumulated to get reimbursed for part or all of that purchase.
The no-annual-fee card is a good fit for budget-minded consumers who want to dabble in travel rewards without the complexity. You’ll start with a welcome offer where you can earn 20,000 Miles once you spend $500 on purchases within 3 months from account opening, as well as a 0% intro APR for 15 months on purchases and balance transfers; 18.49% to 28.49% (variable) APR after that.
The card also has no foreign transaction fees, which can help you save if you travel abroad.
Don’t Spend More Than You Can Afford
When trying to create some budget wiggle room by using credit cards, it’s important to be strategic. “The simplest reward earning strategy is to earn a higher percentage of value on the purchases you’re currently making while never accumulating interest charges,” says Garner.
Therefore, he adds, if you cannot afford to pay the full balance each month, you are usually better off choosing a rather than attempting to optimize other rewards and benefits.
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